Boards have special leadership responsibilities to ensure their organizations are trustworthy. If their firms are not trustworthy, they will suffer at the hands of regulators, customers, employees, and shareholders.
But surely boards are consumed with the important duties of corporate governance, strategy, risk management, compliance, executive compensation, and succession. Can we realistically expect boards to take on something as ethereal as trust?
Yes, we must. Boards cannot discharge their fiduciary duties without attention to the trustworthiness of their organization. Decades ago, the vast majority of an organization’s assets were tangible, such as cash, equipment, and buildings. Today, intangible assets, including brand and reputation, often predominate. Boards have a fiduciary obligation to protect these intangibles, which can be tarnished with the pressing of a cell phone’s video camera, or a posting on Facebook or YouTube.
Edward Snowden destroyed trust in the National Security Agency with a few clicks on his keyboard. The repercussions reverberate worldwide.
Board members should:
- Personally model trustworthy behavior.
- Regularly discuss corporate trustworthiness at board meetings with management.
- Consider trustworthiness in their selection, appraisals, compensation, and coaching of the CEO and officers.
- Ensure the existence of confidential channels and independent monitors for stakeholders to raise concerns about untrustworthy, unethical behavior.
- Require ethics training, including how to build trust, for everyone, including the board to set an example.
Board members have a special responsibility to ensure all stakeholders trust their firms.
Bob Vanourek is the former CEO of five firms from a start-up to a billion dollar NY stock exchange turnaround. He is the co-author of the award-winning book Triple Crown Leadership: Building Excellent, Ethical, and Enduring Organizations. He is one of Trust Across America’s Top 100 Thought Leaders in Trustworthy Business Behavior. www.triplecrownleadership.com
This article is one of several Bob Vanourek wrote for Trust Inc., A Guide for Boards and C-Suites, published by Next Decade, Inc. 2014 and edited by Barbara Brooks Kimmel, Executive Director, Trust Across America – Trust Around the World.